×

Why Best Buy’s best days are still ahead

The Best Buy post-earnings surge continued Wednesday as the shares gained another 2 percent. The stock is now up 22 percent since releasing a blowout quarter before the bell on Tuesday, and one trader is expecting the rally to continue.

On Tuesday, when Best Buy saw it best session since 2001, a trader bought 1,000 October 40-strike calls for $1.00, betting that Best Buy could close above $41 by October expiration, another 2 percent rise in the next 60 days.

Mike Khouw, chief strategist at Optimize Advisors, sees the trade as one that "makes a lot of sense."

"That $1.00 [you pay] represents just 2.5 percent of the current stock price and it's easy to see this stock move 5 percent one way or the other in the next 60 days," Khouw said Tuesday on CNBC's "Fast Money." "You're not risking a whole lot given the big gap upwards that it's had."

Best Buy crushed earnings estimates in its Tuesday premarket-open report. With this week's surge, the stock is currently up more than 32 percent from January, helping Best Buy break out of a relatively monotonous year so far.

Latest Video

Tutorials

Host Bio

  • Melissa Lee

    Melissa Lee is the host of CNBC's “Fast Money” and “Options Action.”

Options Action Traders

From Our Sponsor

Sign Up for Our Newsletter Options Action

Insight directly from the members of our Options Action panel
Get this delivered to your inbox, and more info about about our products and services.
By signing up for newsletters, you are agreeing to our Terms of Use and Privacy Policy.